A Company Projects an Increase in Net Income of $30,000

question 81

Multiple Choice

A company projects an increase in net income of $30,000 each year for the next five years if it invests $300,000 in new equipment. The equipment has a five-year life and an estimated salvage value of $100,000. What is the annual rate of return on this investment?

• A) 10%
• B) 15%
• C) 20%
• D) 25%

Determine the capitalization vs. expensing of costs related to property, plant, and equipment.

Record acquisitions and improvements of property, plant, and equipment in journal entries.

Calculate and understand the concept of interest capitalization.

Understand the IFRS treatment of increases in market value of property, plant, and equipment vs. GAAP.

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Definitions:

IQ Tests

Standardized tests designed to measure human intelligence and cognitive ability.

Monozygotic

Refers to twins that are genetically identical, originating from a single fertilized egg that splits into two.

Dizygotic

Referring to twins that are born from two different eggs fertilized by two different sperm cells, resulting in siblings that are genetically as similar as any other brothers or sisters.

Canalized

A term referring to the limitation of the expression of genetic variability due to genetic or environmental influences, resulting in a trait that is shaped to follow a predictable pattern regardless of variations.